Oil prices remain firm under the impact of the epidemic, the markets confidence in the recovery of demand has been shaken

Oil prices were little changed on Monday, trading in a tight range, as optimism about an economic recovery in Europe offset concerns about a surge in COVID-19 cases new restrictions in Asia. While a wave of new pandemic restrictions in Asia weighed on market sentiment, analysts said optimism about the prospects for a recovery in oil demand kept prices falling further.

Market for oil demand recovery optimistic attitude unchanged, bearish factors limited influence

Both contracts are up more than 30 per cent since the start of the year, with Brent still close to the key $70 a barrel mark.

"Oil prices have remained relatively stable during the recent volatility, indicating that confidence in the recovery in oil market demand remains intact the potential for any downside will be limited barring unforeseen negative developments," said Tamas Varga, oil analyst at PVM. Adding to the optimism, the UK lifted a four-month lockdown on the outbreak on Monday.

Three factors are weighing on oil prices

Expectations of strong economic growth have kept oil prices high in recent weeks, but the pace of inflation has many investors worried that interest rates could rise consumer spending could fall.

Separately, several Indian states said on Sunday that they would extend a lockdown to help contain further spread of the highly contagious coronavirus, as investors remained wary over fears that a mutant strain of the highly contagious coronavirus first detected in India was spreading to other countries. Singapore is preparing to close schools this week, while Japan has declared a state of emergency in three other prefectures to contain the outbreak.

"Brent is expected to remain within its range this week amid growing concerns about the spread of the disease in Asia," said Kazuhiko Saito, chief analyst at commodity broker Fujitomi Co.

U.S. energy companies added oil gas RIGS for a third straight week as higher crude prices prompted some drillers to return to the well site, energy services company Baker Hughes said on Friday.

EIA inventory data this week may be affected by the Colonial pipeline incident

Gasoline shortages that have plagued the East Coast of the United States slowly eased on Sunday, with another 1,000 gas stations reconnecting as Colonial Pipeline's 5,500-mile (8,900km) Pipeline recovered a hacking attack.

Looking ahead to this week, Giovanni Staunovo, commodities analyst at Swiss investment bank UBS, said the outage would lead to a significant drop in gasoline levels in federal commercial oil inventory data. The Energy Department is due to report on inventories on Wednesday.

"The situation at Colonial should lead to inventory drawdown, but it is temporary," said Abhi Rajendran, director of research at Energy Intelligence. Inventory levels are a barometer of energy demand, falling when demand is high rising when demand is low. In such cases, trends can be harder to read because of sudden events.

For more information about the energy trading platform, please consult Eurasia International Energy Trading Market Management (Jiangsu) Co., Ltd., a manufacturer of financial service platform, storage logistics platform, hazardous chemicals trading license application platform bulk energy trading platform.

Source: International Petroleum Network